How AI tools can help firms meet FCA Consumer Duty communications standards

17 Oct 2025

First seen in Professional Adviser

The Financial Conduct Authority’s (FCA) Consumer Duty regulation demands that consumers understand the pension communications they are sent, regardless of their background or literacy level. This is so consumers can understand their pension options to make timely and informed decisions.

Consumer Duty regulation feels like a no-brainer – of course the recipient of financial communication should be able to understand what is in front of them. There is, however, a key problem with it: what is intelligible to one may not be intelligible to another. In a world that combines diverse literacy levels and low financial knowledge, how can we measure understanding? And what can we do about it?

Harnessing LLMs to deliver Consumer Duty outcomes

The answer could lie in harnessing the power of artificial intelligence, and specifically large language models (LLMs) like ChatGPT.

The Consumer Duty doctrine places a clear obligation on firms to deliver “good outcomes” for customers, and a core part of this is ensuring their communications are clear, fair and not misleading, empowering consumers to make effective, timely and well-informed decisions. In practice, this means doing away with jargon and tailoring messages to the recipient’s capability and context.

LLMs could offer a route to clarity. Unlike static ‘frequently asked questions’ pages or generic support, LLMs offer personalised clarity, with users able to ask specific questions about their financial situation using their own words. Consumers could even speak to an LLM like it is a real person, asking back-and-forth questions until they are confident they have understood the information in front of them. Those with very low financial literacy could even ask an LLM to “explain this to me like I’m five”, for a response that likely involves the use of metaphors to help them get to grips with a financial product or term they are unfamiliar with.

Embedding LLMs in digital solutions create an opportunity for the language used to be altered to match a user’s reading level or by providing real-time explanations and examples. They could assess intelligibility by analysing user responses or interaction with data, such as repeated requests for clarification and exits from key pages, flagging terms of sections that cause confusion. This evidence could then be fed back into the oversight process, shifting compliance from a culture of compliance-by-intuition to one of evidence-based clarity. It could even help with improving financial literacy and ultimately engagement.

There could also be a world in which using LLMs could provide a method to respond to the FCA’s call for ongoing monitoring and measurable good outcomes. Imagine if advisers could track their clients’ comprehension levels and provide evidence they were bettering their clients’ understanding, all using artificial intelligence.

Tools are crucial to increasing pensions engagement

Crucially, using an LLM is not about dumbing down. It is about meeting consumers where they are, delivering explanations in plain language, using scenario-based modelling tools and customising the experience for those who may be particularly vulnerable or at risk.

With only 9% of the UK population having access to advice we need to look for creative solutions to increase engagement. The pensions dashboard ecosystem due to go live for the largest schemes in 2026, creates a platform for the masses and enables the industry to think about how technology can improve customer experiences, educate consumers, and go some way to closing the advice gap.

We already know the regulator has got tech on the brain. The FCA’s DP24/3 discussion paper shows us that the regulator has acknowledged the potential for embedding helpful tools in arenas like pensions dashboards to drive engagement and understanding among consumers. It also acknowledges some of the inconsistencies and challenges the industry faces based on the conflict between Consumer Duty and COPS.

AI is still in its infancy, with its full potential yet to be realised. The financial services industry has, in general, been an early adopter of this emerging technology, with some 75% of firms using it in some capacity, according to research by the FCA and the Bank of England.

With Consumer Duty such a core focus for the regulator, it makes sense to implement AI in such a way that it improves the outcome for consumers. Putting an LLM in a place that is easily accessible to them, like the pensions dashboard ecosystem, will increase the likelihood of their interaction with it. With proper oversight, LLMs can help to increase engagement, understanding and consumer outcome, they are not a silver bullet but they do have the potential to enable hyper-personalisation to make pensions relatable for all.

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